Data breaches are on the rise, and companies across the globe are realizing with an ever-growing intensity that the negative impact of such occurrences can be devastating. In addition to the enormous risk to companies’ assets, data breaches can result in loss of customers, sales, revenues and professional reputations. The following eight points are provided to help to inform and clarify how cyber insurance is growing in importance and demand around the world.
Cyber Insurance Is a New Area of Coverage
Cyber insurance, also referred to as cybersecurity insurance, is a relatively new type of insurance coverage designed to assist companies in recovering from losses and damages incurred as a result of a cyber event. Such cyber event could include a security breach, network outage, interruption of service, or malware infestation. As the risks and costs become better leveraged with time, insurance underwriting software designers will be adding algorithms to better resolve this disparity.
Businesses Need Cyber Insurance Coverage
If a business is connected to the web, then it is vulnerable to cyber attack. Cyber attacks can destroy a business’ reputation, resulting in loss of customers and clientele. If secure data was compromised, customers can incur massive losses from identity theft and may be able to show cause why the affected business should be held responsible.
Cyber Insurance Has Two Basic Types of Coverage
One is considered “first party” coverage and the other is “third party” coverage. While some insurers may offer policies that incorporate both types of coverage, this is not always the case.
First party coverage protects from losses that can occur from certain incidents such as ransomware. Third-party coverage is designed to provide protection for third-party companies who manage and oversee the system that has been compromised.
Coverage May Be Limited
Intellectual property theft is not covered by many policies, and intangible damages, such as loss of reputation, can be difficult to measure and cover. Underwriters are optimistic that insurance underwriting software will evolve to include these risks in the future.
It Is Important to Assess Need
An impact analysis and risk assessment can help to assure that the insurance purchased is the best fit for the business.
There are Cybersecurity Brokers Who Can Help
These brokers have special training in all aspects of cyber insurance and can provide valuable guidance.
There are Ways to Minimize Premium Costs
Implementing sound cybersecurity policies and procedures can help to keep staff members informed and lower the company’s risk.
Insurance Companies Can Provide More Than Coverage
Companies providing cyber insurance can partner with their clients to provide staff training and assure regulatory compliance.